Iran History to the 1979 Islamic Revolution 1501 --- Safavid Dynasty establishes Shiism as state religion 1796 --- Qajar Dynasty 1905 --- Constitutional Revolution (Western features adopted; issue: is democracy consistent with Islam?) Shiism official religion 1908 --- Oil discovered. Brits! WWI brings instability, famine 1925 --- Colonel Reza Khan overthrows Qajar Dynasty – coup d’etat. Start of the Pahlavis Dynasty 1941 --- His son, Muhammad Reza Shah Pahlavi becomes shah

1951 --- Prime Minister Mossadeq nationalizes oil industry; conflict with Shah 1953 ---CIA backed coup overthrows Mossadeq and reinstates the Shah 1960s-70s – White Revolution/Khomeini in exile/anti-communist/ pro-western 1975 – Shah declares single-party state/Savat 1979 --- Islamic Revolution. Shah flees country. Ayatollah Khomeini returns from exile Late 1979 – theocratic constitution approved by referendum

Reza Khan Muhammad Reza Shah

Some observations at this point Democratic features date to early 1900 Have experienced two major revolutions in 20th century Secular v. religious conflict Anti – West sentiment has historical roots History of authoritarianism

Petro State 4th largest exporter Member of OPEC State-owned petroleum company

GNP grew quickly in 60s and 70s due to oil revenue Facilitated move away from agriculture to oil-based economy “Rentier state” oil revenues fuels state expenditures. Allows state to escape feedback from citizens.

Rentier Economy: heavily supported by state expenditure, while the state receives “rents” from other countries Iran transformed into rent-seeking state under Pahlavi’s because of increasing income from oil Iran received increasing revenue from exporting oil and leasing oil fields to foreign countries Although shah promoted import substitution policies, by 1979 oil & associated industries provided 97% of foreign exchange and majority of Iran’s GNP

Oil revenue became so great government did not have to rely on internal taxes to generate income, paid expenses from oil profits reduces pressure to diversify economy Iran’s economy becomes dependent on the health of foreign states and world oil market World oil prices unstable in 1970s THEREFORE : The people become unnecessary to the government in a rentier state .. .oops!

Competitive Advantage /                       Thursday, April 4, 2013                                 Home Magazine » Latest News Sponsors Partners Subscribe Competitive Advantage             / Iran's worldwide crude oil exports By Jodie Humphries | 11/16/09 - 16:21                                Iran exports oil all over the world. In fact, in Iran, net oil export revenues amount to approximately US$57 billion and, while oil exports provide approximately half of the Iranian government's revenues, crude oil and its derivatives account for nearly 80 percent of total exports. When it comes to OPEC crude oil production, Iran produces 3.8 million barrels per day, which is approximately 4.5 percent of global production. Now though, Iran has sought at least US$1 billion as an advance from India for supplying five million tonnes of liquefied natural gas a year from 2012 - yet the demand may not be entertained by the buyers. Iran LNG Co, a subsidiary of state-run National Iranian Oil Company, has asked Oil and Natural Gas Corp (ONGC) and its partner Hinduja Group to pay the advance so that it can complete a US$4.35 billion plant that will liquefy the natural gas produced from fields in the Persian Gulf, a source said to Express India.                                                                                                                                                           Advance The demand for advance money came when ONGC-Hinduja were negotiating for a stake in the development of the Phase-12 of the giant South Pars field. South Pars Phase-12 is to feed gas to the LNG plant being built by Iran LNG at Tombak Port by 2011. The source, said that the demand is unlikely to be met as there was no dispensation at present under which advance money can be paid for purchase of oil or gas at a future date. US technology With US technology not coming the Iranian way because of sanctions, the Iran LNG plant that will turn natural gas into liquid state will use technology from Statoil-Linde of Europe. The two trains will produce almost 8.5 million tonnes per annum of LNG from gas piped in from the Phase 12 development of the giant South Pars gas field. The designated capacity is below the 10.5 million tonnes a year target cited in recent years by Iranian officials. Construction on the Iran LNG plant, being built at Tombak Port, about 50 kilometers north of Assaluyeh in Bushehr province, started in 2007 and is 25 percent complete. The plant will cost USD 4.35 billion and is expected to become operational in January 2011.   Related News: The ethical giant - Exploration |Takreer strikes deal for oil refinery |Subsea pipeline leak detection Like this article? Get the RSS feed:                       Latest from Oil & Gas Featured Latest Investment needed in ageing Arab refineries Weekend oil and gas news round-up New riches with minerals in Afghanistan Busy weekend for the MENA region More Like This Editors Choice Fuelling Bahrain's construction boom Refinery and construction costs continue to rise Maturing nicely A new decade dawns for BP        Press | About | Contact | Privacy Policy | Sitemap | Subscribe © 2013 GDS Publishing Ltd. All rights reserved.

Islam - Five Pillars There is only one God, and Muhammad is his Prophet charity pray each day facing Mecca pilgrimage fast during Ramadam Sunni Shiism State authority can be exercised by apart from lineage to the Prophet State leaders not necessarily religious figures Authority follows male descendants of Prophet Ayatollahs have supreme authority History of martyrdom

Pahlavi State Centralized State State banks National radio/TV networks National Iranian Oil Company (NOIC) Central Bureaucracy controlled local governments Majlis became “rubber-stamp” legislature Secularization in judicial branch (European-style judicial system) “White Revolution” Armed forces 5th largest in world by 1979 Patronage – shah’s boost personal wealth by seizing property and establishing tax-exempt Pahlavi Foundation that controlled large companies and fed their wealth 1975 Muhammad Reza Shah formed Resurgence Party, claimed Iran was one-party state, named himself head

Dual Society Upper Class .1% Pahlavi family, court-connected entrepreneurs, senior civil servants and military officers Middle Class Traditional (propertied) 13% Clerics Bazaaris Small factory owners Commercial farmers Modern (salaried) 10% Professionals Civil Servants Office Employees College Students Teachers/ professors Lower Class Rural 45% Landed Peasants Landless Peasants Unemployed Urban 32% Industrial workers, domestic servants, construction workers, peddlers, unemployed

1979 Islamic Revolution Dominant ideology of Iranian revolution: Religion Leader a cleric (Ayatollah Ruhollah Khomeini) Theocracy established Fundamental Islam/ Shiite Causes Shah perceived as being totalitarian Balance between secular and religious state ruptured Ties with US and the Western world Economic decline

Oil prices decrease about 10% in late 70s Consumer prices increase 20% at the same time “Revolution of Rising Expectations” – revolutions occur when people are doing better than they once were and a set back occurs US puts pressure on shah to loosen restrictions on civil society, in particular restraints on political opposition Once restrictions were eased many groups join the revolt (students, teachers, labor groups, oil workers, merchants, and professional associations)

Revolution turns violent 1978 Unarmed demonstrators killed in central square Tehran Oil workers go on strike Anti-regime rallies attract 2 million participants Rallies organized and led by clerics Shah flees the country in February 1979 Khomeini returns to Iran from exile in Paris

Establishment of Islamic Republic April 1979 referendum held, Iranians officially vote out the shah, Islamic Republic established Assembly of Religious Experts – 73 clerics elected by the people draft a new constitution in 1979 US-Iranian hostage crisis on-going during vote to ratify constitution 99% of electorate vote to endorse constitution although only 75% of eligible voters cast votes

Islamic Republic in 1980s Clerics consolidate power Popular support for regime high World oil prices rise again, allowing for social programs, improvements in medicine & housing Iraq invades Iran, people rally around the government Charisma of Khomeini inspired faith in the government Khomeini dies in 1989, constitution amended Ali Khamenei succeeds Khomeini, does not have the same political charisma as the Ayatollah Iran/Iraq war ends in 1988, country war-torn Oil prices drop in 1990’s Population begins to question authoritarian rule of the clerics

Supreme Leader Khomeini “jurist’s guardianship” Grand Ayatollah Khomeini (1979 – 1989d) Referred to as Iman of all Iranians Ayatollah Ali Khamanei (1989 – present) Neither Grand nor expert Former head of the Revolutionary Guard Former president (late 1980s)

Public Policy: Policy-Making Factions Conservatives Created by often contradictory influences of theocracy & democracy Conservatives uphold principles of regime established in 1979 Against modernization because it threatens Shi’ism Wary of western influence Political & religious decision should be synonymous Support right of clerics to run the political system Reformists Believe political system needs reform (but disagree on what reforms) Advocate some degree of international involvement with western countries Believe Shi’ism is important basis of Iranian society Support idea that political leaders do not have to be clerics

Structure of the National Government Parliament = majles

1980s – early years of Republic/ Iran-Iraq War – Conservatives dominate presidency and Majles 1990s – free-market reforms under President Rafsanjani; criticisms of power of the clergy 1992 Majles elections – reformers vetted (not allowed to run)

1997 President Khatami elected. Reformer 2000 Majles elections -- Kordad Front (group of reformers) won 80% vote and 70 % turnout Early 2000s – Guardian Council retaliates “Newspaper massacre” Repression increases. Street protests, mostly students 2004 Majles elections – vetting of reformers. Conservatives regain power 2005 Presidential election – President Ahmadinezhad wins . Reformers divided and perceived as elitist and corrupt. Presidential elections June 2009. Ahmadinezhad wins? MAJOR PROTESTS Greens–worst since 1979. BROAD

Political Cleavages Religion Urban/ rural Young/ older Ethnicity Social Class Reformers vs. Conservatives

(i.e. political culture and values) the contests between or among the Persian authoritarian model of government (with some sense of ethical rule) the secular, democratic model and the Khomeini-inspired theocratic model managing economic and political change reactions to domestic pressures for economic growth and higher standards of living reactions to global pressures to limit domestic policy choices political socialization in the face of a rapidly growing, poorly-educated, and under-employed population maintenance of power by an entrenched minority in a "republic" pragmatic policy making in an absolutist theocracy